zero deficit as the only obsession

The people who helped President Javier Milei prepare the presentation message for the 2025 Budget knew very well that the thousands of variables that are part of the discussion on how the money will be distributed matter little to the Casa Rosada.

The only thing that Milei wanted to highlight was that the total fiscal balance, that is, the income obtained in 2025 must be sufficient to pay expenses, and the interest on the debt, so that not a single peso is missing and there is no need borrow money.

Under this premise, Milei is probably not worried about GDP growth, the exchange rate at the end of next year, inflation or the result of the trade balance, to say the least.

In the president’s mind, the logic that works is this: if there is fiscal balance, all other things will fall into place on their own, and for the better. In other words, if there is fiscal balance, the rest doesn’t matter much. Or, to put it another way, Milei believes that fiscal balance, which is non-negotiable, will bring order to the entire economy.

He seeks to place himself above the predictable pitched battles that will erupt in the budget committees of Deputies and Senators. The government will explain, as far as possible, how it will reach the target established by Milei, the opposition will say that such projections are nothing more than drawings and will try to increase allocations for certain expenses. However, it is very likely that they will face government denial if these increases are not accompanied by corresponding financing.

If the opposition imposes its positions, the end is predictable: impeachment or presidential veto.

For the government, it is essential to insist on what they call “fiscal commitment”. This is what the authorities have been showing for the nine months since they took office.

Opinion polls also continue to tell Milei and her team that a large part of society still tolerates this music. Perhaps this tolerance explains the apparent little interest – in terms of television audience – recorded by the national presidential network that lasted an hour on Sunday night.

But it seems that the markets, which vote every day, approved – at least on the next day – the menu that the government presented.

What’s missing is the street test. Milei started September with the feeling that economic activity had hit rock bottom at some point in the second quarter. And although the V-shaped recovery has been forgotten, the government’s hope is that from now on the positive data will outweigh the negative. The impression is that the recovery will not be uniform and mass consumption data remains worrying. Milei, however, is convinced that zero deficit is more important than all this.